Macquarie eyes smart meter rollout

Brian Robins Electricity

IF THERE is money to be made in government-regulated assets such as toll roads, electricity and gas, it does not take long for Macquarie Bank to show its hand.

And with the likelihood of a rollout of smart meters in NSW, the bank is only too keen to help. The introduction of the meters is under way in Victoria and this week the NSW government disclosed it had established a working party to study their introduction in NSW.

So-called smart meters can be read remotely and the power supply also controlled remotely. As a result, they promise significant savings for power companies, but with uncertainty about their benefit for most households.

But the poor experience in Victoria, where the cost of the rollout has risen to more than $2.3 billion, from the initial estimate of $800 million, and a lack of household benefit from the move, threatens to derail the proposal in NSW before it gets off the ground.

Recently, the power industry overseer, the Australian Energy Markets Commission, opened the door to the possibility of taking meters out of the hands of the power distributors and putting them into independent management, in a bid to drive change.

Macquarie Bank, for one, reckons electricity retailers are the natural owners of the meters, since they already hold the supply contracts with electricity consumers.

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This would involve taking the metering business out of the hands of the distributors, such as Ausgrid and Endeavour Energy in NSW, or Citipower, Jemena or Powercor in Victoria, in favour of having the retailers such as EnergyAustralia, Origin Energy and AGL run it.

In a submission to the Productivity Commission review of electricity networks, Macquarie argued power retailers were better placed to assess and manage the risk of the introduction of meters - and face the loss of customers and market share if they have an uncompetitive product.

For most power users, the lack of clear benefits from smart meters means there is natural concern that their introduction will emerge as a new revenue stream for power companies.

Coming as electricity prices are surging to fund an upgrade to the electricity network, without readily identifiable positives, resistance will be acute.

One of the mistakes in Victoria was to mandate the introduction of the meters just before their unit price collapsed, with the units now costing significantly less than $100 each, depending on their functionality, while Victoria is paying more than double this.

According to some, the greatest benefits of smart meters would be the replacement of meter readers and the elimination of theft of electricity.

The gains here would be much greater than any savings from reduced power consumption, for example, which supporters of the technology claim would help cut power bills by eliminating over-investment in poles and wires.